1. India and the United Kingdom have concluded a mutually beneficial Free Trade Agreement (FTA).
2. on May 6, 2025,Iit was Announced by PM Narendra Modi and UK PM Keir Starmer
3. The agreement includes a Double Contribution Convention on social security.
4. FTA is a historic milestone that:
   1. Enhances trade, investment, and innovation.
   2. Deepens India–UK Comprehensive Strategic Partnership.

Aims to double bilateral trade (currently ~USD 60 billion) by 2030

What is a Free Trade Agreement (FTA)?

1. An FTA is a bilateral or multilateral agreement between countries to reduce or eliminate customs duties and non-tariff barriers on goods and services traded between them.
2.  Objective of FTAs
   1. Promote trade by reducing costs and simplifying procedures for importers and exporters.
   2. Enhance market access for domestic producers.
   3. Encourage cross-border investments and ease mobility of professionals.
   4. Strengthen strategic and economic ties among partner nations.
3.  Scope of FTAs
   1. Trade in goods: Lower customs duties and quotas.
   2. Trade in services: Easier access and licensing.
   3. Investment protection: Stable and transparent frameworks.
   4. Intellectual Property Rights (IPR): Harmonized standards and enforcement mechanisms.
4.  Benefits of FTAs
   1. Wider choice and lower prices for consumers.
   2. Boost to exports and domestic production.
   3. Creation of jobs and support to MSMEs.
   4. Promote technology transfer and industrial upgrading.
   5. Facilitate integration into global value chains (GVCs).

Timeline of Negotiations between India and UK

Year	Event
Jan 2022	Official talks began post-Brexit Progress hampered by: 4 UK PMs in the last 3 years. Elections in both countries in 2024.
Nov 2024	Renewed push after meeting at G-20 Summit, Rio de Janeiro (Nov 2024).
Feb 2025	Final rounds of negotiations resumed
May 6, 2025	FTA officially concluded

Trade in Goods: Tariff Outcomes

For India:

1. 99% of Indian exports to the UK will face zero duty.
2. Covers nearly 100% of bilateral trade value.
3. Boosts labour-intensive exports, including:
   1. Textiles & garments
   2. Marine products
   3. Leather and footwear
   4. Gems and jewellery
   5. Toys, sports goods
   6. Engineering goods, auto components, engines
   7. Organic and specialty chemicals

 For the UK:

1. India to reduce tariffs on 90% of tariff lines.
   1. 85% of these become fully duty-free within 10 years.
2. Notable reductions:
   1. Whisky & Gin: Current 150% → 75% (initial), then 40% by Year 10.
   2. Automotive imports: Tariffs drop from 100%+ to 10%, under quota.
   3. Medical devices, cosmetics, aerospace parts, electrical machinery, soft drinks, chocolates and biscuits, salmon, and lamb — significant duty cuts.

Who Benefits:

1. British shoppers: Cheaper clothes, seafood (e.g., frozen prawns), footwear, and Indian food products.
2. Indian consumers: Lower prices on high-end UK imports like whisky, cosmetics, and medical devices.

Services, Investments & Mobility

1.  Services & Investment Liberalisation
   1. FTA includes provisions to ease norms for:
      1. Cross-border services
      2. Digital trade
      3. Financial services
      4. Educational exchanges
   2. Promotes greater UK investment in Indian sectors like fintech, aerospace, healthtech, and education.
2.  Professional Mobility
   1. It supports:
      1. Contractual service suppliers
      2. Business visitors
      3. Intra-corporate transferees (ICTs) and their families (with right to work)
      4. Independent professionals (e.g. chefs, yoga instructors)

What Is Double Contribution Convention (DCC) ?

1. A bilateral social security agreement to avoid double social security payments by workers.
2.   Benefits for Indian Workers:
   1. 3-year exemption from paying UK social security taxes.
   2. Prevents double taxation—contributions in India recognized in the UK.
   3. Ensures retirement benefits eligibility without financial loss.
   4. Lowers employment costs for Indian IT and services companies in the UK

India’s FTA Landscape (as of May 2025) :

 India has signed FTAs with 16 countries or regional groupings, including:

Country/Bloc	Key Notes
Sri Lanka, Bhutan	Early bilateral FTAs in South Asia
Thailand, Singapore, Malaysia	Part of India–ASEAN engagements
South Korea, Japan	Comprehensive Economic Partnership Agreements (CEPAs)
Australia, UAE, Mauritius	Recently concluded, covering goods and services
ASEAN (10 nations)	Multilateral framework for regional cooperation
EFTA (Iceland, Liechtenstein, Norway, Switzerland)	Signed in 2024–25; includes investment chapters

 

Era	Key Developments
Colonial Rule	1858–1947: British Crown governed India; Queen Victoria became Empress of India.
Post-Independence	1950: India remained in the Commonwealth after becoming a Republic.
Cold War Period	Strained ties due to India's non-alignment vs. UK's NATO alliance.
1990s Reforms	Economic liberalisation improved trade, investment, and political engagement.
2004 Onward	Strategic Partnership established; regular high-level visits and enhanced cooperation.

Bilateral Trade :  (As of August, 2024)

Year	Total Trade (£ billion)
2021–22	£27.1
2022–23	£36.3 ↑ 34.2% (£9.2 bn increase)

UK Investment in India

Masala Bonds

 Key India-UK Joint Military Exercises :

Key India-UK Bilateral Defence Projects

Issue	Details
Russia-Ukraine War	UK criticizes Russia; India remains neutral → policy divergence.
Pakistan/China Ties	UK’s balancing act complicates India’s security engagement.
Khalistan Issue	Allegations of UK harbouring Sikh separatist elements → diplomatic strain.
Defence Procurement	UK slow to align with India’s G2G (Government-to-Government) model.
Extradition Issues	Delays in high-profile cases like Vijay Mallya, Nirav Modi.
Illegal Migration	1 lakh+ undocumented Indians in UK; no migration pact yet.
Colonial Legacy	Historical grievances remain sensitive (Partition, cultural restitution, etc.).

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